Bank Negara Indonesia First Quarter 2013 Results is in line with expectations

Bank Negara Indonesia - 1Q13 results (Rp5,350Buy; TP Rp5,500)

Results in line with expectations. BNI reported Rp2.1tr net profit in 1Q13 (+34% YoY, +3% QoQ), accounting for 26% of ours and the market expectations. The results were achieved on the back of strong loan growth, high recovery of written off loans and stable provisioning charges.

23% YoY loan growth was recorded in March 2013 (19% in 1Q12) and this was particularly due to strong growth of 44% from the corporate segment, which made up 42% of the total loans compared to 35% in Mar 12. Part of the reasons of the strong growth was the migration of medium-sized loans into corporate and adjusting this additional loans, total corporate loans would have been growing at 26% YoY while the medium loans at 20%, instead of the reported -17%. In addition, consumer lending grew 29% YoY and now make up 21% of total loans compared to 20% a year earlier.

NIM improved to 5.9% in 1Q13 from 5.3% in 1Q12. The strong loan growth was not followed by the deposits which grew 10% YoY leading to rising LDR to 83% in Mar 13 from 75% in Mar 12 and 78% in Dec 12. This, coupled with stronger growth in CASA (+22% YoY, 65% of total deposits), helped improve NIM to 5.91% in 1Q13 from 5.28% in 1Q12 but it was lower than 6.0% recorded in 4Q12. Net interest income hence increased 23% YoY.

Asset quality maintained. Total NPL remained the same at 2.8% with coverage ratio of 122% after the bank wrote off some Rp736bn of bad debt. It was however, was able to recover Rp648bn of the previously written off loans, indicating improving recovery ratio of 88% from 71% in FY12. Of the segment, the small loans (
Rising cost to income due to expansion while CAR at 17.5%. Cost-income ratio was 51% in 1Q13, up from 49% in 1Q12, and this was due to expansion (number of offices increased 8% YoY and ATM 30% YoY), salary adjustment and higher annual bonus.

Maintain Buy. The counter is trading at 2.0x P/BV 2013F and has outperformed the index by 29% YTD. We will review our numbers but keep our Buy call for now with TP of Rp5,500.

Indonesia Market Summaries, April 29 2013